Overnight Market Headlines
- Nasdaq fell as shares of Google-parent Alphabet tumbled following a revenue miss and Apple dropped, though the S&P 500 eked out another record closing high. Dow Jones rose 38.52 points (0.15%) to 26,592.91, the S&P 500 gained 2.8 points (0.10%) to 2,945.83 and the Nasdaq dropped 54.01 points (0.66%) to 8,095.39. For the month, the Dow rose 2.6%, the S&P 500 gained 3.9% and the Nasdaq added 4.9%.
- Gold prices firmed as the USD slipped to a one-week low, making Gold more attractive, with markets awaiting the Federal Reserve's interest rate decision this week. Spot gold rose 0.3% to $1,283.66 per ounce.
- China's iron ore futures rose and posted their fifth straight monthly gain, while construction steel marked its best month since July 2018, buoyed by hopes that demand will remain firm after the Labour Day holidays. Declining iron ore and steel inventories in China prompted mills and traders to replenish stocks ahead of a five-day weekend, also helping prop up prices. Spot iron ore for delivery to China was up at $95.00 a tonne.
- Copper prices rose as investors bet that China would respond to weak factory data by implementing fresh stimulus measures. Benchmark LME copper closed 0.3% up at $6,415 a tonne.
- Oil prices pared gains after global benchmark Brent crude rose above $73 a barrel, as the market grew less worried that a rebellion against Venezuelan President Nicolas Maduro would hit the country's crude exports. Brent crude futures hit a session high of $73.27 per barrel and settled 76 cents, or 1.1%, higher at $72.80. U.S. crude futures closed at $63.91, up 41 cents, or 0.7% on the day after hitting a session high at $64.75.
· The US dollar underperformed the majors - DXY index down 0.4% on the day closing @ $97.50.
· EUR rose from 1.1180 to 1.1229
· USD/JPY fell from 111.60 to 111.25
· AUD ranged sideways between 0.7027 and 0.7060
· NZD rose from 0.6655 to 0.6685
· AUD/NZD fell from 1.0575 to 1.0551 – a three-week low.
· AUDEUR dipped below 0.6300 towards 0.6270 lows (assisted by a stronger EUR.
AUD's rally off April's low had bulls believing a return to this month's high was in the works, but that rebound could be delayed temporarily. Downside misses to China's Caixin PMIs (yesterday) put AUD bulls on the defensive as the pair sank towards 0.7020/30 support. The Chinese Caixin report showed the 12-month outlook from businesses is optimistic and growth for China's March industrial profits improved. Both factors suggest China's economy could be stabilising. Month-end USD purchases contributed to AUD's slide overnight but the selling impacts are likely to wane. A bout of soft U.S. data helped send the U.S. rate complex lower and increased the odds of Fed cuts later this year.
Tonight’s Fed meeting and looming U.S. data should determine if AUD can extend its recent rally. If the Fed leans dovish and U.S. data come in downbeat, a deeper fall for U.S. rates and the USD are likely. AUD could then likely clear the 0.7100/20 zone where the April 24 high, 55- and 21-DMAs and daily cloud base sit.
AUD bears sweating it out into key risks. Mixed US data, whippy action in early NY, dip sub-0.7040 bought. Stocks, commodities gain; upbeat risk buoys high beta currencies.
AUD nears the April 26 high will little pullback seen, shorts are nervous. Daily techs favour bulls, RSI rising, 50 Fib of 0.6715-0.7295 supports. Bulls need to overcome 0.7100/20 to gain control.
A break of that resistance would target the daily cloud top, 200-DMA and key 0.7205/10 resistance.
Event Risk Today
- Australian Economic data today : Apr CoreLogic home value index is expected by Westpac to decline 0.4% based on movements in the daily index.
- NZ: In the batch of Q1 labour data today, the consensus is for an unchanged unemployment rate of 4.3% (Westpac is at 4.4%).
- China: It is the Labour Day public holiday. Markets are closed for the rest of the week.
- US: The FOMC policy decision is expected to leave rates unchanged. The focus will be on the extent that Chair Powell repeats the ‘patient’ rhetoric after recent data has been more encouraging on the consumer and capital goods orders but within the broader context of still below target inflation. Apr ISM manufacturing is anticipated to hold a high level at 55.0. The index has been tracking above the Markit measure which is back to a more moderate 52.4. Mar construction spending is seen to be flat with the upcycle looking to have turned.